October 02, 2020

Consumer Financial Services Practice Digest

5 min

Coalition of Attorneys General Opposes SBA Paycheck Protection Program Appeals Procedures as Violating Borrowers' Due Process Rights and the Administrative Procedure Acts

On September 28, 2020, a coalition of eighteen state attorneys general submitted comments regarding the SBA's interim final rule (IFR) relating to Appeals of SBA Loan Review Decisions under the Paycheck Protection Program. This IFR, which we previously summarized, relates to borrowers' appeals of SBA decisions to the SBA's Office of Hearings and Appeal (OHA). The attorneys general concluded that the appeals procedures outlined in the IFR "do not comport with due process and run afoul of the Administrative Procedure Act (APA)."

GAO Provides New Insight into SBA PPP Loan Audit Process and Shares Lender Concerns Regarding the Still Unfolding PPP Forgiveness Process

On September 21, 2020, the U.S. Government Accountability Office (GAO) released a new report regarding its oversight of the federal government's COVID-19 pandemic response. The report, Federal Efforts Could Be Strengthened by Timely and Concerted Actions, includes an assessment of the Small Business Administration's (SBA) administration of the Paycheck Protection Program (PPP), supplementing the GAO's June 25, 2020 findings. The new GAO report sheds additional light on the SBA's plan for reviewing loans and discusses the GAO's – and lenders' – concerns about lender responsibilities in the still unfolding loan forgiveness process.

California Launches Mini-CFPB

California has officially launched its Mini-CFPB initiative , which roared back to life when, as part of its 2020–21 budget, the California legislature proposed a new consumer financial regulatory framework under the California Consumer Financial Protection Law (CCFPL). The law signed by the California Governor Gavin Newsom establishes a state consumer financial protection agency—the Department of Financial Protection and Innovation (DFPI) —the so-called "the California mini-CFPB.” The CCFPL seeks to "strengthen consumer protections by expanding the ability of the department to improve accountability and transparency in the California financial system and promote nondiscriminatory access to responsible, affordable credit, among other purposes."

AML Programs at the Center of Recent FinCEN and Federal Banking Agency Releases

The Financial Crimes Enforcement Network (FinCEN) and the Federal Banking Agencies (defined below) have been active lately in the Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) space, particularly as it relates to AML programs. On September 16, 2020, FinCEN issued an advanced notice of proposed rulemaking (ANPR) seeking comment on potential amendments to anti-money laundering (AML) program requirements. This follows the August 13, 2020 release by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency (Federal Banking Agencies) of a Joint Statement on Enforcement of Bank Secrecy Act/Anti-Money Laundering Requirements (Joint Statement) and the August 18, 2020 release of a statement (FinCEN Statement) by FinCEN describing its approach to enforcing the BSA.

Charter Fight Flares Up Again Amid OCC's Push for Payments Companies

The Conference of State Bank Supervisors (CSBS) issued a terse, three-sentence warning for the OCC to back off its plan to offer a payments charter. This reaction followed media reports that Acting Comptroller of Currency Brian Brooks is ready to start accepting applications in the next few days.

The New Normal? Executive Guidance Asks Agencies to Reform Enforcement Policy

Given all the tumult with natural disasters, COVID-19, and other goings on in Washington, a memorandum directing government agencies to reform how they operate may have gone unnoticed. It’s worth considering. On August 31, 2020, the Office of Information and Regulatory Affairs (OIRA), a subagency within the Office of Management and Budget (OMB), issued Memorandum M-20-31 (the “Memo”), which elaborates on and implements directives from a prior executive order to consider and adopt certain best practices and procedures to promote fairness in administrative enforcement and adjudication. The Memo directs federal agencies to adopt measures aimed at according greater due process to individual and company targets for investigations and enforcement actions, and to promote transparency and accountability in the initiation and pursuit of administrative actions. The Memo’s directives usher in the potential for long-overdue substantive and procedural revisions to the rules of practice for independent agencies.

Following the Mone(tary Relief): District Court Limits the FTC’s Authority Post-Liu

In the wake of the Supreme Court’s opinion in Liu v. SEC, lower courts are starting to address the breadth of its applicability. On August 31, 2020, the District of Arizona welcomed the Supreme Court’s directives in Liu when denying Electronic Payment Solutions of America Inc.’s (EPS) bid for summary judgment against the FTC. To the extent other courts read Liu as similarly applicable, this could have broad implications for the FTC’s authority to obtain monetary relief.

Keeping Up with Compliance: How to Successfully Generate Leads in the Face of Regulation

Keeping compliant is top of mind for today's lead generators, at both the federal and state levels. To understand how to be a trusted lead seller or buyer, you have to look at current legal requirements and proposed legislative trends, including state licensing, advertising and privacy law, and enforcement actions. How do you prepare your business for government and counterparty scrutiny? The presentation for the lead generators at the LeadsCon virtual conference outlines the latest legal and regulatory developments.

Education Lenders: Avoiding UDAAP Violations in the COVID-19 Reality

The education funding world's response to the COVID-19 pandemic and their efforts to help borrowers that have been negatively affected may have the unfortunate consequence of perceived and real violations of federal and state laws that prohibit unfair, deceptive, or abusive acts or practices (UDAAPs). This presentation for student loan servicers at the Education Finance conference examines how you may be at risk of violation and suit (Servicers, Lenders, Bond Issues) and ways to mitigate or respond to those risks.

ACA Huddle: An Overview of the NYC DCA Foreign Language Services Rules

The New York City Department of Consumer Affairs (DCA) has enacted new debt collection rules related to Limited English Proficiency (LEP) consumers. This presentation hosted by ACA International as part of its Daily Huddle series outlines best practices for operational and legal compliance. Topics include recordkeeping, affirmative acts, disclosures, prohibited practices, and the latest guidance from the DCA.